Lemon Tree Hotels share price jumps by 5% as it looks to raise funds after 80% fall in profit

• The hotel chain posted a 80% fall in profits and posted a consolidated net loss of ₹19 crore in the last quarter of FY20.
• Lemon Tree expects its numbers to bounce back to normal only when a cure is found. The company said that it expects the May numbers to continue until September at least.
• Given the situation, the hotel chain is hoping to raise ₹150 crore through a rights issue.

Lemon Tree Hotels poor quarterly results saw its shares jump by 5% as the market opened on Tuesday (June 2). The hotel chain posted a huge fall in profits but the board also approved a fundraising plan for ₹150 crore. The government’s decision to allow hotels to operate from June 8, also brought in some cheer in the market.



The hotel chain posted a 80% fall in profits and posted a consolidated net loss of ₹19 crore in the last quarter of FY20, a big fall from the ₹33.6 crore profit in the same quarter the previous year.

For FY20, its net losses stood at ₹21.6 crore.

However, Lemon Tree expects its numbers to bounce back to normal only when a cure is found. The company said that it expects the May numbers to continue until September at least. Given the situation, the hotel chain is hoping to raise ₹150 crore through a rights issue.

Due to the coronavirus pandemic, Lemon Tree hotels had to shut their doors from the beginning of the lockdown on March 25, even before that the fear of the virus had kept customers away.

“The growing concerns around the spread of Covid-19 followed by the nation-wide lockdown announced by the central government impacted the operating environment for hotels significantly,” said Patanjali Keswani, Chairman & Managing Director – Lemon Tree Hotels.

The company also said that its revenue from operations were down by 76% in April 2020 on a year-on-year basis, whereas the expected numbers from May are set to be down by 70%.

While the company has said it would not layoff permanent employees, it has announced a freeze in hiring as well paycuts across the management.

“All discretionary spends like advertising, leased cars, etc.are paused. There will be a careful monitoring of all costs undertaken to achieve breakeven at Net EBITDA level in Q1 FY21,” said the company.

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